MUMBAI: The Indian rupee closed nearly flat on Friday, tracking subdued moves in its Asian peers and as expectations of the central bank’s intervention blunted the pressure of dollar demand from local oil companies and foreign banks.
The rupee ended at 83.50 against the US dollar, barely changed from its previous close at 83.5025. The local currency declined nearly 0.1% week-on-week.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50, closed higher but were down 1.6% and 1.8%, respectively, on the week as jitters about the upcoming results of the national elections prompted selling by foreign investors.
Overseas investors have pulled out nearly $2 billion from Indian equities in May so far, contributing to pressure on the rupee.
But the currency’s losses have been capped by market expectations that the Reserve Bank of India will curb sharp declines, traders said.
Traders are also “pre-empting the RBI’s action and selling above 83.50 (on USD/INR), while buying at 83.40”, a foreign exchange trader at a private bank said.
The dollar index was steady at 105.2, while Asian currencies were mostly rangebound.
The rupee “continues to remain tight in a range of 83.35 to 83.55”, Amit Pabari, managing director at FX advisory firm CR Forex, said. An upward move out of the range could see the rupee rise above 83.20, he added.
US inflation data due next week will be in focus as investors gauge when the Federal Reserve may begin to ease policy rates. India’s inflation data is also due next week.
A soft labour market report for April followed by the rise in jobless claims reported on Thursday have raised expectations that the Fed will begin easing rates from September.
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